Senate Passes Bill to Avert Debt Crisis

WASHINGTON -- The Senate voted 74-26 on Tuesday to pass a bill that ends the debt ceiling standoff, raising the nation's debt limit while setting the stage to trim trillions of dollars of federal spending.

In the Senate, the compromise -- which would raise the $14.3 trillion federal debt ceiling by another $2.4 trillion, while cutting federal spending by at least $1.5 trillion -- was passed just 12 hours before the U.S. Treasury was set to run out of money to pay down its loans.

In a speech in the White House Rose Garden shortly after the Senate vote, the President urged lawmakers to take a "balanced approach" in coming up with specific ways to trim the deficit.

"Yes, that means making some adjustments to protect healthcare programs like Medicare so they're there for future generations," Obama said. "It also means reforming our tax code so that the wealthiest Americans and the biggest corporations pay their fair share."

Although President Obama and top Democrats had been pushing for a "balanced" deal that included tax increases in addition to cuts, no tax increases were included in the final bill.

The bill would initially increase the debt limit by $400 billion and establish procedures to allow the limit to be raised further in two steps for a total increase of $2.4 trillion. That's enough for the nation to meet its debt obligations through the beginning of 2013.

Democrats had sought a plan that would include no cuts to Medicare, Medicaid, or Social Security, but the final deal wouldn't shield Medicare from cuts.

The bill would create a new 12-member joint House and Senate committee that will be charged with agreeing on $1.5 trillion additional in cuts over 10 years and presenting it to Congress by Nov. 23. Congress would be required to vote on the proposal by Dec. 23.

As one of its options, the committee could decide to implement tax reform, which could include raising taxes.

If the committee can't agree on how to cut the deficit, then automatic spending cuts of as much as $1.2 trillion would kick in in 2013. Half of those cuts would come from defense spending, and the other half would come from domestic spending.

The domestic spending cuts likely would target payments to Medicare providers. Under the bill, any potential Medicare cuts wouldn't come from charging beneficiaries more; rather, the savings would come from paying providers -- doctors and hospitals -- less for treating Medicare patients.

The two physicians in the Senate -- Tom Coburn (R-Okla.), an obstetrician, and John Barrasso (R-Wyo.), an orthopedic surgeon -- split their votes on the bill. Coburn voted against the bill, and Barrasso voted in favor of it.

When asked about potential Medicare cuts that may result from the passage of the bill, Barrasso instead attacked the Affordable Care Act and said, "The biggest cut for doctors is in Obamacare, which is why we need to repeal and replace."

Coburn, for his part, explained his opposition to the bill in an op-ed published online Tuesday in the Washington Post called "Why I Voted Against the Debt Deal." Coburn said that despite what lawmakers are saying, the deal won't actually cut government spending.

"I voted against this agreement because it does nothing to address the real drivers of our debt," he wrote. "It eliminates no program, consolidates no duplicative programs, cuts no tax earmarks, and reforms no entitlement program."

Opponents of the plan have pointed to the fact that Medicare already reimburses less than private insurers, and that doctors are already facing a 30% cut in their reimbursement come Jan. 1.

Cutting reimbursement rates to doctors is not the way to rein in spending in the entitlement program, said Jerry Avorn, MD, professor of medicine at Harvard Medical School, in an email to MedPage Today and ABC News.

"One of the main issues confronting Medicare is that doctors don't often know what treatments (drugs and otherwise) are the most effective and the most cost-effective/affordable," he said. "Until we enable MDs to know how to make the best decisions on behalf of patients, we can beat them ... as much as we want by slashing reimbursement rates, but it won't get to the most important aspect of the problem."

Alan Sager, PhD, professor of Health Policy and Management at Boston University School of Public Health, said that doctors need to be involved in negotiations that will affect their Medicare reimbursement.

"Since doctors' patient-by-patient clinical decisions control almost 90% of total healthcare spending, it will be impossible to contain healthcare costs without doctors' active engagement and cooperation," he said in an email. "That will follow from successful negotiations of a package deal between doctors and payers -- a deal that addresses money and how it is paid, administrative costs of running a practice, fear of being sued, and physicians' obligations (as fiduciaries) to spend our huge but finite resources carefully."

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